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10. Conclusion
Every authority concerned with Co-operative
sector will have to play its part in ensuring
that the aspirations of the Urban Co-operative
Banking sector are nurtured in a manner that
depositor interest and the public interest at
large is protected. The role of RBI could, thus,
be to frame a regulatory and supervisory regime
that is multi-layered to capture the
heterogeneity of the sector and implement
policies that would provide adequate elbowroom
for the sector to grow in a non-disruptive
manner. The State and Central Governments could
recognize that the UCBs are not just
co-operative societies but they are essentially
banking entities whose management structure is
that of a co-operative. They should recognize
the systemic impact that inefficient functioning
of the entities in the sector could have.
Consequently, it would be in the interest of the
sector if they support, facilitate and empower
the RBI to put in place mechanisms and systems
that would enable these UCBs to perform their
banking functions in a manner that is in the
overall interest of the depositor and the public
at large. |
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Appendix
Draft terms of reference of the TAFCUB
-
To
categorise the UCBs in the state under the two
tiers of regulatory regime.
-
To
identify banks, which are viable, potentially
viable and unviable.
-
To
recommend the various conditions, including
the nature and extent of funds required to be
infused, in each UCB identified as potentially
viable, the source thereof, changes in
management where necessary and the time frame
for achieving viability. In doing so, the
TAFCUB may assign responsibility to different
agencies for facilitating the turn-around.
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To
set up milestones for evaluation of progress
made under the rehabilitation plan.
-
To
recommend the future set up of the existing
unlicenced banks whose applications are
pending with Reserve Bank of India.
-
To
recommend the manner and time frame for exit
of the un-viable banks, which could be in the
form of merger / amalgamation, conversion into
a credit society and liquidation. The
proposals for merger / amalgamation
recommended by the TAFCUB shall conform to the
guidelines issued in this regard.
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To
arrive at a threshold limit of deposits that
would make a depositor automatically eligible
to become a member.
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To
recommend on the management aspects of a bank
which is placed under the revival plan.
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Any other issues as may be referred to it by
the Reserve Bank of India.
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Annexure-I
This Memorandum of Understanding dated
.
between the Government of the State of
represented by
.
.having office at
.
(hereinafter referred to as 'the State') and the
Reserve Bank of India having its Central Office
at Shahid Bhagat Singh Marg, Post Box No. 406,
Mumbai - 400 001 (hereinafter referred to as
'Reserve Bank').
Whereas the State administers the
.Co-operative Societies Act, and the Reserve
Bank is the regulator of co-operative banks
under the Banking Regulation Act,1949(as
applicable to co-operative banks), the State and
the Reserve bank exercise regulatory powers over
co-operative banks concurrently;
And whereas it is considered essential to have
coordination between the State and the Reserve
Bank for ensuring proper regulation of
co-operative banks;
It has, therefore, been decided to enter into a
Memorandum of Understanding between the State
and the Reserve Bank as under:
-
On
requisition of the Reserve Bank under Section
. of the
..Co-operative Societies Act,
for supercession of the Board of a
co-operative bank and appointment of
Administrator therefor, the State shall comply
with the requisition forthwith.
-
On
requisition of the Reserve Bank for winding up
of a co-operative bank and appointment of a
Liquidator therefor under Section
. of the
Co-operative Societies Act, the State shall
comply with the requisition forthwith.
-
The Board of the a Co-operative bank shall not
be superceded by the Registrar without the
prior approval of the Reserve Bank
-
The election to the Board of a co-operative
bank shall not be postponed nor the tenure of
the Board extended without concurrence of the
Reserve Bank.
-
The State shall introduce long form audit
report for conducting statutory audit of all
urban cooperative banks. For banks with a
deposit base of over Rs. 25 crore the State
shall provide for the statutory audit to be
mandatorily conducted by qualified Chartered
Accountants to be appointed in consultation
with the Reserve Bank of India.
-
The State shall modify the audit rating models
such that the same is brought in alignment
with the gradation system adopted by the
Reserve Bank of India.
-
The State shall work to raise the standards of
corporate Governance by putting in place
certain minimum fit and proper criteria for
members to be eligible for seeking election
for the post of director or for being
appointed as CEO, based on guidelines provided
by Reserve Bank.
-
The State shall provide for upgradation of HR
and IT in co-operative banks in consultation
with the Reserve Bank.
-
The State shall provide for conduct of special
audit of a co-operative bank if requested by
the Reserve Bank and for submitting of report
to the Reserve Bank within the time stipulated
by it.
The State government hereby notes that the
Reserve Bank would be constituting a State level
Task Force on Urban co-operative banks (TAFCUB)
for identification of potentially viable UCBs
and that in the event of any of the above terms
being not observed, the Reserve Bank, at its
discretion, would wind up the TAFCUB and it
would be at liberty to initiate such corrective
action in terms of the provisions of the B.R.
Act, 1949 (AACS) as it considers appropriate
with respect to the urban cooperative banks in
the state, notwithstanding any recommendations
that might have been made by the TAFCUB.
In witness whereof the parties hereto have
signed this Memorandum of Understanding at
on
this
.. day of
2005.
..
For the State
.
.
For the Reserve Bank of India.
Witnesses
1.
2.
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